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CPA Bidding

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# 1
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Hi,

 

I am little bit confused in CPA bidding because i didn't try till now and i would like to try. I would like to know how we actually pay to adwords in CPA bidding?

For Eg:

If i select Max CPA or Target CPA and accept the bids recommended by adwords then how we actually pay?

a) do we pay to adwords when only visitors get converted  (whatever x amount google recommended us) irrespective of how may clicks we get.

for eg: Target CPA bids

if i set 50 pounds per conversion and i got 20 conversions so i have to pay 1000 pounds (50 multiply by 20) to google.

 

Or

 

b) or google would set the bids accordingly to the target cpa bids and charge me on each clicks (same like cpc model)

 

Please Help!

Thanks

Shazen

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Accepted by topic author Shazen
September 2015

Re: CPA Bidding

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# 2
Top Contributor

Hi Shazen, none of the bidding strategies actually change how you pay for your Ads - the options of CPC, CPM for example remain the same.

 

The CPA bidding strategy is all about trying to achieve a specific cost-per-acquisition as opposed to other strategies such as achieving as many clicks as possible (the default), or as many conversions (Conversion optimisation), etc.  You'd use CPA when you have a product that has a specific profit point and you know that if your costs per conversion go above that, you'll make a loss.  So, for example, if you sell a product and you make $50 net profit on each sale, you'd need your CPA to be less than $50 (preferably quite a lot less!).

 

Note that the CPA bidding strategy is not magic.  If you set an unrealistic target CPA you may simply end up with no conversions at all.  This is why Google recommends you accept their initial proposed CPA.  If this is too high, you'll need to work on other aspects of the Account and/or website to bring it down.

 

Also note that CPA isn't really suitable for Campaigns/Groups that could lead to sales of a range of items with different profit points.  For example, if you sold golf clubs, it's likely that the clubs will vary greatly in their cost and profit, but a single Ad for you store could lead to a sale of any one.

 

Finally, note that CPA requires a minimum of 15 conversions in the past 30 days to work and personally I'd recommend you look for more like 30 or more conversions in that period for it to be really effective.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

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Marked as Best Answer.
Solution
Accepted by topic author Shazen
September 2015

Re: CPA Bidding

Top Contributor
# 2
Top Contributor

Hi Shazen, none of the bidding strategies actually change how you pay for your Ads - the options of CPC, CPM for example remain the same.

 

The CPA bidding strategy is all about trying to achieve a specific cost-per-acquisition as opposed to other strategies such as achieving as many clicks as possible (the default), or as many conversions (Conversion optimisation), etc.  You'd use CPA when you have a product that has a specific profit point and you know that if your costs per conversion go above that, you'll make a loss.  So, for example, if you sell a product and you make $50 net profit on each sale, you'd need your CPA to be less than $50 (preferably quite a lot less!).

 

Note that the CPA bidding strategy is not magic.  If you set an unrealistic target CPA you may simply end up with no conversions at all.  This is why Google recommends you accept their initial proposed CPA.  If this is too high, you'll need to work on other aspects of the Account and/or website to bring it down.

 

Also note that CPA isn't really suitable for Campaigns/Groups that could lead to sales of a range of items with different profit points.  For example, if you sold golf clubs, it's likely that the clubs will vary greatly in their cost and profit, but a single Ad for you store could lead to a sale of any one.

 

Finally, note that CPA requires a minimum of 15 conversions in the past 30 days to work and personally I'd recommend you look for more like 30 or more conversions in that period for it to be really effective.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: CPA Bidding

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# 3
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Hi Cobnut,

Thanks for the detailed info. Smiley Happy

Regards,
Shazen